In business, SWOT analyses are used for organizations to assess strengths and weaknesses, usually to evaluate their position in the marketplace: “What is our advantage if you compare us to X company? Where do they shine while we might struggle? Do we view anything as an immediate threat or opportunity?” While valuable, this technique can drive retailers to focus only on immediately observable and comparative differences, rather than looking to the ‘bigger-picture’ challenges they face – a prime example of which is the need to optimize today’s supply chain.
A firm foundation from which to execute is key
Consider homeowners evaluating their houses for the market. One of the key value drivers for homes is how well they are built and equipped to stand the test of time. If a house is built on a hastily-made foundation, or one laid long ago that has begun to settle, the time and resources needed to fix it could add up to staggering debt. Similarly, for retailers striving to eliminate their technological debt, as “cracks” start to appear in the supply chain ecosystem they’ve built, it becomes more obvious the foundation needs some work. In putting off the necessary “work,” investing in piecemeal technology or, worse, being slow to adopt it, retailers find they’re spending more in the long run than if they’d invested in a future-proof system at the start.
The only effective way to combat disruption is by synchronizing supply chain activities onto one common platform
Retailers are challenged by massive data, a great deal of inefficiencies, and unfortunate gaps in their true understanding of the consumer. Technology should meet these challenges and enable speed and agility, especially in the supply chain. But, investing for the sake of shiny, new tools isn’t the answer if you don’t have a good strategy to begin with, and many supply chains stand on a makeshift foundation of disconnected or loosely connected solutions. Further, retailers make investments and replace technology with swift decisions, rather than looking at the whole picture. Or, they customize their legacy technology in silos, only to realize after these time-consuming projects that they now have multiple systems that address the same business process. If retailers are struggling to execute because they are faced with too many decisions, or they continually run up against forecast errors and out-of-stocks, the focus to prioritize, then, is aligning all supply chain processes on one singular platform to harmonize demand forecasting, replenishment, allocation and order fulfilment. However, only 36% of supply chain professionals say their organization operates on a single supply chain platform.
Rather than being frozen in time, retailers need to adopt a modernized approach
As retailers strive to protect and grow margins, inventory is a key lever to pull in managing the high cost to serve, bringing us to one of the most crucial areas of supply chain: replenishment planning and execution. Your demand forecast fuels the supply chain and, without a foundation to connect supply chain activities, you’re not going to replenish and execute well.
You don’t have to dig too deeply to see the disconnects become apparent:
- “Anyone’s guess” levels of inventory: Retailers lack complete visibility into what’s available due to solutions that aren’t connected to the end-to-end supply chain. It’s tricky to replenish well when the status of inventory is a guessing game.
- Failing to appreciate new variables for the demand forecast: Retailers can’t keep up with the volume and sources of data needed for forecast accuracy and customer behavior, especially for fresh items, is not as predictable as it used to be.
- Lack of a holistic approach to take in data: MDM systems aren’t one-size-fits-all. The solution must be designed to understand custom lines of business for the retail industry, especially when it comes to short life and perishable items.
These and other issues mean that retailers struggle with manual intervention and human errors, understanding of actionable insights and how to effectively and quickly deliver results for their business units, as well as appreciation of how one impacts the other for a closed loop of intelligence. Retail winners are unafraid of innovation – they welcome new technology and are actively looking for ways to invest. Just look at Amazon, or to Walmart’s impressive work keeping up through innovation and acquisition. Also, AI cannot be ignored as it becomes more pervasive in the industry. In a recent survey, retailers expressed their belief that AI’s greatest potential to improve supply chain management relates to quality and speed. Fifty-nine percent cited real-time supply chain updates or quality control as the processes most likely to be impacted by the integration of AI, followed by improved demand management (49%) and the ability to identify and address inefficiencies (44%).2
Data sources are complex. The system used to make sense of them shouldn’t be.
Retailers are challenged to fully understand data and demand. Some of this is due to the sheer volume of data, but also because consumer behavior is unpredictable. As a result, legacy systems can’t keep pace with the current retail nuances. With a piecemeal supply chain, one function or another will always be lagging, operating separately and “in the dark.”. Because traditional demand forecasting systems base predictions solely on historical data; they can’t measure external influence or keep up with changing customer behavior. And, since they lack the ability to learn, legacy solutions simply cannot forecast future demand. AI, however, does learn and delivers rich customer insights, based on complex data sources. When the AI engine learns and adapts to provide a different output according to its knowledge and understanding of all factors, tt gets smarter, sees things the human eye cannot, and delivers actionable insights supply chain leaders can use immediately. And because everything is self-contracted to evolve, AI eliminates the need for upgrades to supply chain systems, especially if delivered through a SaaS-based solution. Tied to AI, a cloud-delivered tool delivers the speed of change needed to keep up – and retailers gain autonomy.
Future-proof your supply chain by leveraging proven AI-enabled supply chain applications delivered one platform for end-to-end visibility.
A “future-proof” supply chain is one that can learn and predict customer demand by category, product, and channel. It’s connected, cohesive and autonomous. It’s an AI-powered supply chain operating on a single, unified platform in which each link supports and strengthens the others. It will streamline and automate the decision-making process to better support replenishment planning strategies, automating the decision-making process, minimizing errors, reducing cost and speeding up time-to-shelf. You’ll not only improve your total cost of ownership; you’ll also have a holistic understanding of your customer with a quick path to shopper satisfaction. By accurately predicting demand across all channels and applying analytics to historical and real-time data, you’ll have the ability to drive the entire supply chain. And you’ll gain what really matters in the end: a return on your technology investment, and a firm foundation to stand on.
For more information, read the report referenced in this article.
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About The Author:
Symphony RetailAI has 25 years of experience in CPG retail
- 15 of the top 25 Retailers are our customers
- 25 of the top 25 CPGs are our customers
- Global operations with customers in 70 countries
Role-based solutions for Retail and CPG
Retail AI platform for customer-centric retailing
For more information please visit them: https://www.symphonyretailai.com/
